Britannic closes door to new business

AILING life assurer Britannic is taking the final step in its restructuring by closing the doors to new business at its annuities arm.

Chief executive Paul Thompson, who has been trying to shore up Britannic's finances since taking over in July, said returns from Britannic Retirement Solutions were too low for it to stay in the market.

The group is understood to have been looking for a buyer for the unit for months. The decision to move it into run-off is likely to mean job losses at BRS's office in Redhill. Thompson said the position of annuitants would not be affected.

Britannic has already closed its £5bn with-profits fund to new business, scrapped its dividend and halted bonuses to policyholders, since issuing a profits warning at the start of the year.

The group sold its Britannic Money mortgage business in the summer. New sales will now be concentrated through its fund management and unit trust arm, Britannic Asset Management.

The annuities market has been one of the few rays of light in the gloomy life insurance sector. But firms writing new policies have had to put aside more capital given the gradual increase in life expectancy in Britain.

BRS, set up three years ago, offered tailor-made plans in the 'impaired annuity' market - retirement policies to pensioners with perceived health problems. Sales rose from £166m in 2001 to £362m last year and it made operating profits of £4m in the first half of this year.

Roman Cizdyn, analyst at Commerzbank, said the decision was 'a logical extension' of Britannic's strategy. He added: 'Overall, they are still short of capital and that is why they have closed the doors.'